IMF warns AI selloff, bond yield spike and cyberattacks could threaten global markets

Warning against complacency

The International Monetary Fund warned on 13 October 2026 against complacency in global financial markets, which it described as still resilient but facing elevated risks. The warning appears in the semiannual Global Financial Stability Report, published on the second day of the IMF's annual meetings with the World Bank, held this year in Bangkok. The report names three risks as plausible near-term catalysts for a sharp tightening of financial conditions: an AI-driven market correction, a spike in government bond yields and severe cyberattacks. The IMF said these risks do not necessarily threaten financial stability on their own, but could become systemic if underlying vulnerabilities amplify them. It also said AI investment has so far helped offset economic drags from the war in the Middle East and from broader policy uncertainty.

AI investment and leverage

The report warns that if AI profits or investment slow, a correction in related asset prices could spill into broader markets. Leverage in the AI sector could worsen any shock by forcing sales and raising volatility. Hyperscalers now account for 10% of global investment-grade bond issuance, up from less than 1% in 2024. The issuers behind this year's share include Alphabet, Amazon, Meta, Microsoft and Oracle, whose combined interest costs in the second quarter more than doubled from a year earlier to nearly $6 billion. The report also points to growing evidence that AI capabilities may require less investment than expected, or may deliver smaller economic gains.

The IMF put its concern about the sector in direct terms.

The consequences of an AI correction could be global.

Circular deals and concentrated exposure

The IMF reviewed 14 circular deals made since 2023, in which AI companies provide financing that returns to them as purchases. These deals include about $300 billion in equity inflows and $650 billion in debt. In return, the recipients committed to buy $1.4 trillion of cloud services or chips in the future. Nvidia, for example, provides multibillion-dollar funding to large data centre operators so they can afford its chips. The IMF warned that these commitments are concentrated in a few companies, so trouble at one of them could cause large problems.

Bond market pressure

Government bond yields have risen worldwide since the Middle East war began at the end of February, partly because of inflation concerns linked to costlier energy imports. The IMF says long-term term premiums in advanced economies now sit at the top of their historical range, partly due to persistent worries about deficits in many countries. French government bond yields are near 5%, a level not seen in almost two decades. The IMF noted that bond markets have so far absorbed the stress well, with hedge funds able to unwind some repurchase agreement borrowing without triggering turmoil. Higher yields could push policymakers to raise rates, which would worsen debt burdens for countries rolling over short-term debt.

Policy response

Athanasios Vamvakidis, deputy director of the IMF's Monetary and Capital Markets Department, told reporters after the launch that the cyber risks are known and very much unknown. He set out the policy priority for governments.

The policy priority should be to strengthen resilience before new shocks hit the economy.

The report also says severe cyber incidents could undermine market confidence and disrupt critical financial market infrastructure, because rapid digitisation has increased the attack surface. The IMF called on policymakers to curb leverage, including derivatives and margin loans, where it is excessive. The report adds that the three key risks have been rising.